tv Nightly Business Report PBS January 20, 2014 7:00pm-7:31pm PST
this is "nightly business report" with tyler mathisen and susie gharib. >> cramer's action alerts plus service is home to his multimillion dollar portfolio. good evening, everyone. welcome to a special mlk day holiday edition of "nightly business report." >> the first three weeks of 2014 are in the books, and tonight we want to look at our economy in transition and how those changes may play out for the rest of this year. >> there is a new leader at the federal reserve. the first female to run the nation's bank. and a job market that looks very
much different today than it did just a year ago. >> and that's where we begin tonight. one of the biggest things in the american economy undergoing significant change is the labor market. the unemployment rate is coming down, but the amount of people looking for work is at a record low. those out of work for an extended period of time now have no safety net. >> veronica is caught in the crossfire of the new economy. she is one of the 3 million americans who are out of work for more than a year. that $1200 a month has been an economic lifeline. >> not having that money is devastating. i don't know where i'm going to get money to pay my rent, to buy food, to pay car insurance.
it's -- it almost leaves me speechless just trying to articulate what it means not to have that money to fall back on. >> reporter: what's next for her? it's complicated. armed with a phd in law enforcement, it was not that long ago when she was earning more than $75,000 a year, owned a condo, and was saving for retirement, but her contract jobs with nonprofits dried up when the sluggish economy meant less grant money available. >> i have to have a job. you cannot survive in this world without it, so i have to keep pushing myself. >> reporter: now she's working with a state run job placement program trying to reinvent herself. the --
>> it's just the magnitude of this particular economy and this particular job market. we tell people you may have four or five different careers before you retire. >> reporter: december 2013 was the weakest month of hiring in three years. just 74,000 jobs added to the economy. the unemployment rate dropped to 6.7% because twice as many people, including college graduates, simply gave up looking for work. the labor forwork -- the retiret of millions of baby boomers is also shrinking the labor force. the average retirement age is
now just under 60 with the oldest boomers retiring early because of the sluggish job market. some of the folks who are leaving the labor force due to the retirement, would have stayed in had the labor market been stronger. >> more than 8.7 million jobs have been lost between january 2008 and february 2010. since then, the government says there's been an increase in more than 7.5 million jobs. the economy is closing the jobs gap, but more than five years after the recession we're still playing catch up. i'm hampton pearson in washington. >> there are jobs out there, but sometimes they may not be the kinds of jobs people want. take manufacturing. the name alone conjures up assembly lines and in some cases these jobs do pay more, but it
has an image problem. mary thompson has more. >> reporter: they're not pretty, but they pay. that's a widely held view of manufacturing jobs. >> it's innovation and technology. it's robotics. it's 3d printing. we need to open up our doors and invite people. >> reporter: those will find there are 600,000 jobs to be filled. the jobs becoming available as older workers retire. one challenge, getting a younger generation to buy into a career with what they typically associate with their grandparent's situation. a 2012 survey, while 87% believe
manufacturing is important, manufacturing jobs rank last among 18 to 24-year-olds among the ones they wanted. companies have to sell perspective employees on a different manufacturing world where factories are not sweat shops. schools have a role to play. >> the high schools have to bring those trades back into the school to give a great foundation to open up opportunities for students who don't want to be four-year degree students. >> reporter: the manufacturing institute says they need to show potential hires there's room for advancement. >> part of what's involved in manufacturing is the opportunity to grow. they operate in teams. oftentimes the biggest decisions happen on the front lines. >> reporter: for nightly business report, i'm mary thompson.
joining us now is robert johnson. he's the former ceo of black entertainment television. also with us, mark zandy. gentlemen, welcome to you both. let me begin with you, mark. you heard our report. still a lot of americans out of work. you know, where are they going to find jobs, and will we ever find those lost jobs from a couple of years ago, will they ever come back? >> there will be more jobs. housing will be a key source of jobs over the next two to three years. home construction will pick up significantly. construction jobs, manufacturing, landscaping will pick up. i would expect more job growth
in high-end services. accounting, advertising, management consulting. those are highly skilled jobs that require lots of education and they're for the high-end. >> mr. johnson, your businesses touch a lot of corners of the american economy. are you hiring this year and if so, are you able to find the kinds of employees to fill those jobs? >> well, tyler, the way we look at hiring across all the companies that we have investments or ownership in whether it is automobiles, hotels, financial services, priva it is based on where we're going to find the productivity. if we can find it in more people doing the right kinds of jobs, we will hire.
i think that's where most of the businesses i'm involved in look at the particular labor market today. we want to see more people working, but we have to have more people working in a productive manner generating the kind of products and services that the consumer is ready to buy and allowing us to complete with lower cost labor and more efficient services abroad. >> we hear from people who are out of work how much they do want to work. yet, there is one group that is the most vulnerable. these are the people around 50 years old or so making under $50,000 a year. they're very vulnerable and anxious about their future and their inability to find work. what's the prognosis for these people and if they don't find work, what does it mean for the economy? >> yeah, i worry a lot about this group. if you're in your 50s or 60s,
you've been out of work for some time. to get back into the work force is going to take a big efrfort,a big change. you'll have to move, get new skills, reeducate. it is really difficult to get this group reengaged back into the work force again. if we're unsuccessful, the economy is going to be much diminished. these folks have lots of experience and talents. they want to work and the economy is going to be smaller because we can't engage them. it is going to be tough on us fiscally. if these folks can't work, they're going to call upon social security earlier than they otherwise would and medicare and medicaid. we have to work really hard to get that group back in, but that's the group i worry about the most going forward. >> mr. johnson, let me turn the conversation to a topic that's
been front burner. income wealth inequality. how would you go about addressing that? how worried are you about it? what would you do to fix it? >> let me first echo what mark said. i think when you look at the demographics of the united states and therefore the united states labor force and the consumer group, more and more of those individuals are going to be minorities. african-americans and hispanics. and if we don't provide a way to effectively introduce this group to the labor market in a way that they can accumulate decent paying jobs and therefore wealth and home ownership and other assets, we will have some very serious, not only fiscal problems, but social problems. to your question, my belief
that in order to change the dynamics, you've got to do something with the tax code to encourage businesses to invest in urban areas, to encourage businesses to put money into the hands of minority entrepreneurs because minority entrepreneurs tend to hire minority workers because they live in the neighborhood for the most part and that's where their particular culture is. we've got trillions of dollars sitting offshore. how about bringing some of that money back into the united states under a program if a company invests in an urban area or minority businesses, they get a tax deduction. more and more people are put to work. i've proposed something i borrowed from the nfl callede
" "roj." if we adopted that for all of corporate america, before you can fill a vacancy or a position, you must interview a minority candidate for a job, i think we begin to put the focus on where jobs needed and that's reducing the number of african-americans and hispanics that are grossly underemployed in this country. >> thank you so much for your thoughts. we appreciate both of you joining us today. jobs surely will be a big challenge for the new head of if federal reserve, janet yellin. how you feel about the changing jobs landscape. >> i worked in a profession that has close to 40% unemployment a few years ago and now things seem to be picking up at least in that market sector.
>> i think i'm in a good position in my career. i would be worried for people graduating from college or looking for jobs to find a good job. >> the field with which i got my degree has minimized environmental studies. it's very difficult. i'm going for my yoga teacher training. flexibility is important with people if they want to find a job. on february 1st, janet yellin takes the helm of the federal reserve. her decisions will move markets around the globe and impact the pockets of ordinary americans. she's the first woman to lead the central bank in its 100 year history. there were only two chairman in the past 25 years and yellin takes over at a critical time. >> reporter: from the moment she was nominated -- >> the nomination is confirmed.
>> reporter: -- yellin took on the responsibility of guiding the u.s. economy at one of its most challenging times in history. >> she doesn't have crystal ball, but she has a key understanding of how the markets work. >> reporter: yellin, born in brooklyn, learned about the early struggles of the market. her two mentors were noble prize winners. even her husband is a nobel laureate. since 2010, she's been the second most powerful voice of the fed after ben bruneke. now as chairman, yellin faces
the daunting task of unwinding the economic stimulus. >> i would agree that this program cannot continue forever. >> reporter: but now comes the hard part. yellin most oversee what wall street calls the taper. taper too much of those bond purposes and too fast, the economy could choke. too slowly, it could fuel inflation. another challenge her policy moves also need to promote job growth. hiring has picked up and the unemployment rate is coming down, but not fast enough to encourage a dramatic change in business and consumer buying. perhaps yellin's toughest task will be to clearly explain this new chapter of fed policies to lawmakers and the american
public. how well she communicates her vision could dictate the future and the success of the world's largest economy. >> our country has come a long way since the dark days of the financial crisis, but we have farther to go. >> and joining us now is bob, he's a chief economyist of fact and opinion. >> i don't think that her way of operating is going to seem very different to many people. his lessons from the great depression told him it should be easy. janet is going try to help the economy a little bit more. that's her ideology. >> she certainly has to help the economy, bob. as you look back in federal reserve history and you look at various moments of crisis and what the fed chief is focused
on, when we get a look at the tenure of yellin, what's it going to be? >> we're no longer in a period where we think the economy is slipping back. we're starting to grow. we're worried about the size of the fed's balance sheet will bring inflation around. i don't think those risks are around the table of this year, but they'll be coming in the second and third years of her administration. >> how difficult a trick is it going to be for her to dial back on the stimulus that's been in the system for several years now? >> that's going to depend on the economy. if the economy isn't going up, it's going to be difficult to move. >> how do you think wall street is going to respond to janet yellin? >> i think they're going to
respond well. she's been at the fed and in the public eye for so long. she's a very good economist. >> you get janet yellin and a noble prize winner right under her own roof, her husband. how influential is he on her? >> they've written papers together. she's lucky to have such a husband with expertise. >> thank you very much. coming up next, the changing face of health care is here. how will it continue to evolve? that's next. but first, how do you feel about the changes in the health care system? >> i actually really like the health care law. i think that it's a step for america to join the 30 or so
nations that all have universal health care. >> from a medicine perspective, it's not. i can't imagine what it's like when you have to go to a hospital and have something done. >> i think not enough money is kind of going towards social programs to help people in lower democratic status get health care. >> i'm a freelance employee who couldn't afford it prior to obamacare, so i think it is tremendous. the u.s. health care system is heading into one of its most monumental years since the 1960s. now one of the leaders in this changi changing marketplace is the cleveland clinic. president obama has called it a role model of health care delivery.
we have the ceo of the cleveland clinic. toby, great to have you on the program. >> nice to be here, susie. >> now that the affordable care act is here, a lot of people are wondering about quality of care and cost. is care going to be better, worse, the same, and is it going to cost us more? >> it started out to do three things. one is to improve quality. i think the transparency coming with it is going to help with quality. we also know that access is a big issue around health care. we can't tell what the access so going to be like around insurance because it is too early to tell that. but we have had made significant improvements in access to all of our locations. we have same day appointments.
it has the ability to improve the access to the patient to a physician. the real question is going to be around cost. frankly, i think it is too early to tell about that. we know that there's going to be less money paid to hospitals. we're going to have more efficient and hopefully they'll bring the cost down. >> do you expect the affordable care act will increase the likelihood people will seek out health care, or will it decrease it? i have spoke to some physicians that think it will decrease it. >> we've seen the rate of inflation of health care go down over the last several years and now the high deductibles are 33% of insurance policies. that's one of the things that
count for the decreasing of inflation in health care. i think that remains to be seen. there certainly is going to be more of an emphasis on individual taking responsibility for the financial aspects of their health care. >> so we are at sort of inflection point about health care with the affordable care act. obviously the cleveland clinic has a successful business model. what kinds of steps are you taking to prepare for the changes? are you cutting costs and thinking about acquisitions? >> we know we have to have a more efficient delivery system. we've taken $180 million out of purchasing. we're also looking at efficiency
of health care by bringing hospitals together so we can share resources and have collaboration so everybody doesn't have to have their own data collection system. >> if you were the health care czar and you would make one change that would be the best change in the way you deliver the health care to us, would it be paying doctors just a salary and getting away from fee for service? what is it? >> if you look at what causes premature death in the united states, 40% of it is related to behaviors. smoking, lack of exercise, and obesity. if we're going to reduce the cost of health care across the united states and have a healthier population, we have to address those things. and i think we can do that by
raising the understanding of those problems across the entire country. i hope we'll see that in the future years. >> thank you so much, toby. nice for you to come and share this conversation with us. >> sure. and finally tonight, as you know today is the martin luther king holiday. the holiday that honors the slain civil rights leader. he fought for racial and economic equality across the united states. his "i have a dream" speech is widely regarded as one of the most stirring pieces of oratory in american history. king was assassinated in memphis, tennessee. this holiday was created back in 1983 when president reagan signed into it law.
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